A COUNTRY STUDY AND REPORT AND COMBINED SUMMARY OF SEMESTER IV WORK ON Different Industries and Sectors of Malaysia Submitted to Gujarat Technological University IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE AWARD FOR THE DEGREE OF MASTER OF BUSINESS ASMINISTRATION Submitted by _________________________________________________________________________ _____ Marwadi Education Foundation’s Group of Institutions MBA PROGRAMME Affiliated to Gujarat Technological University Ahmedabad May, 2012 1 SUMMARY OF AUTOMOBILE SECTOR OF MALAYSIA Auto industry Malaysia is a flourishing industry which takes in areas of activities from car manufacturing to dealing auto business with foreign countries. Automobiles industry of Malaysia is one of major producers and exporters of vehicle parts, components and accessories, which are widely marketed to most of leading countries of world. Foreign countries like Japan, UK, Thailand, Taiwan, Singapore, Indonesia, are major importers of Malaysia's cars and automotive parts. Leading automotive manufacturing companies like Mercedes, Suzuki, Ford, General Motors, Mazda, Nissan and Mitsubishi are using Malaysian automotive products and accessories because of their high quality and competitive prices. As per the market survey conducted by business times during 2009 suggests that, “sales of Malaysian vehicle reached 4,648 units with an overall growth of 13.8% and is expected to increase in coming years.” During the period of global slowdown from 2008 to 2011, the Malaysian economy got through the other rival economies by keeping inflation under control through their effective banking system and constantly controlling manufacturing cost. Realizing the cost advantage other competitive edge that Malaysian automobile industry possesses, the government of Malaysia is incessantly trying to reorganize their automobile industry by encouraging the manufacturers to produce more and more number of cars to meet constant growing demand of consumers. Many tax incentives are also provided. Such as, Government of Malaysia is also providing a 50% refund on excise tax for domestic automakers in order to induce them to produce in large numbers. Leading automakers of auto industry Malaysia 2 Some of leading automakers in Malaysian auto industry are Perodua, Perusahaan Automobile National Bhd., Malaysia's first national car project was Perusahaan Automobile National or PROTON. Malaysian car manufactures are trying to meet demands of customers by providing reliable and competitive auto components and accessories. MALAYSIAN AUTOMOTIVE ASSOCIATION Malaysian Automotive Association was established in November 1960. It is commonly known as the Federation of Malaya Motor Traders Association or FMMTA. The founder members were Ampang Motors, Asia Motors, Borneo Motors, Champion Motors, Cycle & Carriage, Anglo-American Corporation, Orchard Motors, Tan Chong & Son Motor Co, Wearne Brothers and the East Asiatic Company. Original and fundamental objective for establishing MAA was for members to discuss issues relating to the Motor Industry The core objectives of this federation are as under: Objectives o To encourage, promote and protect the interest of the Automotive Industry in Malaysia. o To consider and support or to oppose any proposed legislation or other measures affecting the interests of Members and to cooperate with and make representations to any Government Department and any Municipal or other Local Authority for the purpose of furthering or safeguarding the interests of the Automotive Industry and of benefiting road users. 3 o To disseminate to its Ordinary Members information on matters affecting them in particular and the Automotive Industry in general and to that effect, to collect, compile, collate and thereafter to disseminate such information in the form of reports and/or statistics to its Members. o To act and be a medium of communication for its Ordinary Members for the furtherance and promotion of their mutual interests. o To assist and advise any Member who may be engaged in enforcing any principle considered by the Association to be for the benefit of the Automotive Industry or in resisting any action or proposal considered by the Association to be against the best interests of the Automotive Industry. o To promote and encourage the formulation of trade tests and standards in skilled and semi-skilled occupations in the Automotive Industry and to provide or assist in and the provisions of training to enable workers to achieve such standards. o To promote, encourage, and provide means for mutual consultation and cooperation between Members in dealing with industrial disputes and unrest, providing that the Association shall not pursue any of the objects of a Trade Union as defined in the Trade Union Ordinance 1959. o To assist and advise Members in regard to any matter connected with industrial relations and generally promote, foster and protect the interests of Members. Activities o The federation arranges monthly council meetings. o In meeting, they compile, analyze and distribute the sales data and production data. o They have dialogue with government agencies as and when required during policy- making related to the industry o Hold Press Conferences and raise issues and resolve problems with relevant Governmental Agencies on matters relating to the Motor Vehicle Industry which affect the interest and business of Members. o Sponsor Technical Seminars in order to give push to innovation among the members. o Arranging Motor Shows and auto exhibitions in order to attract the world car market to the domestic industry. 4 Malaysia- National Automotive Policy Introduction: Since the establishment of Proton in 1985, Malaysia has succeeded in developing integrated capabilities in the automotive industry, which include local design and styling capability, full scale manufacturing operations and extensive local participation in the supply of components. Today, Malaysia is ASEAN’s largest passenger vehicle market with more than 500,000 vehicles sold annually with 90% of that manufactured or assembled domestically. Nevertheless, much of the country’s success in developing the domestic automotive industry has been facilitated by policies that have promoted local vehicle manufacturers and moving forward, global and domestic challenges put the sustainability of this industry at risk. Moving forward, Government policy and support will be focused towards automotive industry participants providing sustainable economic contribution. The key drivers for such contribution will be economic scale, industry linkage and competitive value added activities. OBJECTIVES OF THE NATIONAL AUTOMOTIVE POLICY The overall objective of the NAP is generating sustainable economic value creation. This 5 will maximize the long term contribution of the automotive sector to the national economy and at the same time ultimately benefit the Malaysian consumer. The need to create economic value entails that the industry will continue to require supportive Government policies in order to become fully competitive internationally. The NAP therefore aims to facilitate the required transformation and optimal integration of the national industry into regional and global industry networks. The urgency of the transformation is driven by an increasingly liberalized and competitive global environment. Consequently, the Government has set out the following objectives for the national automotive sector: 1. To promote a competitive and viable domestic automotive sector, in particular the national car manufacturers 2. To promote Malaysia as an automotive regional hub, focusing on niche areas 3. To promote a sustainable level of economic value added and enhance domestic capabilities 4. To promote a higher level of exports of vehicles as well as components and parts that are competitive in the global market. 5. To promote competitive and broad based Bumiputera participation in the domestic automotive sector 6. To safeguard the interests of consumers in terms of value for money, safety and quality of products and services 1. Provide Government support and incentives based on sustainable economic contribution The Government will continue to nurture and support the development of the domestic automotive sector via a comprehensive package of grants and incentives. Such Government support and incentives will be aimed at optimizing sustainable economic contribution, namely the scale of operations, extent of industry linkages, and the development of local and Bumiputera capabilities. 6 1. A sustainable level of economic contribution must ultimately relate to the type and level of value added activities, which will be competitive for the domestic market and for export in a fully liberalized environment. Thus, it would not be consistent with this policy to seek to maintain a level of value added activities which will not be viable and sustainable in the long run. The level of support will also be correlated to the level of economic contribution and value add. In this context, a large scale manufacturing concern with exports and high industry linkage will be favored relative to a pure assembly operation with little value added activities. Similarly, greater emphasis will be given to sales, distribution and after sales activities compared to pure importation of vehicles. Support for manufacturing will come principally in the form of access to the Industrial Adjustment Fund and research & development (R&D) grants. These grants and incentives will be given based on pre-agreed conditions